Bill on retiree health insurance premiums re-emerges

Legislation introduced Friday in the House would allow retired military and civilian federal workers to pay their monthly health care premiums with pre-tax dollars.

The bill (H.R. 1110), introduced by Rep. Tom Davis, R-Va., also would enable active-duty military personnel to use what he called a pre-tax rebate to pay for the supplemental insurance most purchase to cover gaps in TRICARE, the Defense Department's health insurance program.

"We're talking about a modest amount of money, but to those on a fixed income, this could have a real impact," Davis said. "This measure is not a cure-all for our nation's complicated health care woes, but it will make health insurance more affordable. And I am proud we are ready to take this step to right this wrong for federal and military employees."

Specifically, the bill would let retirees subtract the amount they pay for health insurance premiums from the income they report to the Internal Revenue Service, resulting in a lower taxable income.

Though a section of the Internal Revenue Code enables employees in the public and private sectors to pay for health insurance with pre-tax dollars, it does not authorize employers to make this so-called "premium conversion" benefit available to retirees.

Passage of the legislation would result in average savings of $820 per year for federal annuitants, according to government estimates. "With health care premiums increasing by double digits and cost-of-living adjustments for annuitants climbing by only 2 percent per year, this legislation would help balance the books for federal and military retirees," Davis said.

The measure received praise from the National Active and Retired Federal Employees Association and the Military Coalition, which is made up of 35 organizations representing military personnel and veterans.

"More than just retirees should care about this legislation," said NARFE President Margaret Baptiste. "Imagine the shock of a newly retired federal employee when she receives her first annuity check and learns that the federal government no longer uses pre-tax compensation to pay her share of health insurance premiums."

The bill, initially introduced in the 106th Congress, has received strong bipartisan support. The Government Reform Committee unanimously approved it in the 109th Congress, but it stalled in the Ways and Means Committee because it was overshadowed by the president's top two domestic priorities: strengthening Social Security and improving the tax code. This session, however, nearly half the members of the Ways and Means Committee have signed on as original co-sponsors of the bill.

Stay up-to-date with federal news alerts and analysis — Sign up for GovExec's email newsletters.
Close [ x ] More from GovExec

Thank you for subscribing to newsletters from
We think these reports might interest you:

  • Sponsored by Brocade

    Best of 2016 Federal Forum eBook

    Earlier this summer, Federal and tech industry leaders convened to talk security, machine learning, network modernization, DevOps, and much more at the 2016 Federal Forum. This eBook includes a useful summary highlighting the best content shared at the 2016 Federal Forum to help agencies modernize their network infrastructure.

  • Sponsored by CDW-G

    GBC Flash Poll Series: Merger & Acquisitions

    Download this GBC Flash Poll to learn more about federal perspectives on the impact of industry consolidation.

  • Sponsored by One Identity

    One Nation Under Guard: Securing User Identities Across State and Local Government

    In 2016, the government can expect even more sophisticated threats on the horizon, making it all the more imperative that agencies enforce proper identity and access management (IAM) practices. In order to better measure the current state of IAM at the state and local level, Government Business Council (GBC) conducted an in-depth research study of state and local employees.

  • Sponsored by Aquilent

    The Next Federal Evolution of Cloud

    This GBC report explains the evolution of cloud computing in federal government, and provides an outlook for the future of the cloud in government IT.

  • Sponsored by Aquilent

    A DevOps Roadmap for the Federal Government

    This GBC Report discusses how DevOps is steadily gaining traction among some of government's leading IT developers and agencies.

  • Sponsored by LTC Partners, administrators of the Federal Long Term Care Insurance Program

    Approaching the Brink of Federal Retirement

    Approximately 10,000 baby boomers are reaching retirement age per day, and a growing number of federal employees are preparing themselves for the next chapter of their lives. Learn how to tackle the challenges that today's workforce faces in laying the groundwork for a smooth and secure retirement.

  • Sponsored by Hewlett Packard Enterprise

    Cyber Defense 101: Arming the Next Generation of Government Employees

    Read this issue brief to learn about the sector's most potent challenges in the new cyber landscape and how government organizations are building a robust, threat-aware infrastructure

  • Sponsored by Aquilent

    GBC Issue Brief: Cultivating Digital Services in the Federal Landscape

    Read this GBC issue brief to learn more about the current state of digital services in the government, and how key players are pushing enhancements towards a user-centric approach.

  • Sponsored by CDW-G

    Joint Enterprise Licensing Agreements

    Read this eBook to learn how defense agencies can achieve savings and efficiencies with an Enterprise Software Agreement.

  • Sponsored by Cloudera

    Government Forum Content Library

    Get all the essential resources needed for effective technology strategies in the federal landscape.


When you download a report, your information may be shared with the underwriters of that document.